Structural Unemployment

AAA

DEFINITION of 'Structural Unemployment'

A longer-lasting form of unemployment caused by fundamental shifts in an economy. Structural unemployment occurs for a number of reasons – workers may lack the requisite job skills, or they may live far from regions where jobs are available but are unable to move there. Or they may simply be unwilling to work because existing wage levels are too low. So while jobs are available, there is a serious mismatch between what companies need and what workers can offer. Structural unemployment is exacerbated by extraneous factors such as technology, competition and government policy.

INVESTOPEDIA EXPLAINS 'Structural Unemployment'

Structural unemployment can often last for decades and may need radical change to redress the situation.

For example, hundreds of thousands of well-paying manufacturing jobs have been lost in the U.S. over the past three decades as production jobs have migrated to lower-cost jurisdictions in China and elsewhere.

The 2007-09 global recession also aggravated structural unemployment in the U.S. As the jobless rate peaked at over 10% and the average unemployment period for millions of workers rose significantly compared with previous recoveries, their skills deteriorated during this period of prolonged unemployment. The depressed housing market also affected the job prospects of the unemployed, since relocating to a new job in another city would mean selling their homes at a substantial loss, which not many were willing to do.  

Growing technology in all spheres of life may increase future structural unemployment, since workers without adequate skills will get marginalized, while even those with skills may face redundancy given the high rate of technological obsolescence.   
 

RELATED TERMS
  1. Concealed Unemployment

    When people who are out of work are not counted in official unemployment ...
  2. Underemployment

    A measure of employment and labor utilization in the economy ...
  3. Cyclical Unemployment

    A factor of overall unemployment that relates to the cyclical ...
  4. Frictional Unemployment

    Unemployment that is always present in the economy, resulting ...
  5. Lagging Indicator

    1. A measurable economic factor that changes after the economy ...
  6. Natural Unemployment

    The lowest rate of unemployment that an economy can sustain over ...
Related Articles
  1. Economics

    Examining The Phillips Curve

    This model depicts an inverse relationship between unemployment and wage inflation, but is it accurate?
  2. The national unemployment rate is defined as the percentage of unemployed workers in the total labor force.
    Economics

    The Unemployment Rate: Get Real

    Depending on how it's measured, the unemployment rate is open to interpretation. Learn how to find the real rate.
  3. thinkstock|istock
    Economics

    What You Need To Know About The Employment Report

    This widely watched indicator of economic well-being directly influences the market.
  4. Professionals

    Introduction To The Continuing Claims Report

    This weekly economic release contains important information concerning unemployment levels and insurance.
  5. Economics

    Okun's Law: Economic Growth And Unemployment

    Learn about Okun's Law, why it is important and how it stood the test of time since first being published.
  6. Budgeting

    Are You Living Too Close To The Edge?

    If a missed paycheck will make your finances cave in, you must learn how to make proper supports.
  7. Fundamental Analysis

    The Misery Index: Measuring Your Misfortune

    The Misery Index measures a combination of unemployment and inflation, but what does it mean for your finances?
  8. Options & Futures

    Explaining The World Through Macroeconomic Analysis

    From unemployment and inflation to government policy, learn what macroeconomics measures and how it affects everyone.
  9. Professionals

    Jobless Growth: Are You Prepared?

    Economic growth doesn't always mean employment growth. Learn about how the jobless growth economy affects workers and investors.
  10. What Does Cyclical Unemployment Mean?
    Economics

    What Does Cyclical Unemployment Mean?

    Cyclical unemployment is the change in job availability due to upswings and downswings in the business cycle. When the economy is robust and booming, cyclical unemployment is at its lowest. When ...

You May Also Like

Hot Definitions
  1. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  2. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  3. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  4. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  5. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
  6. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
Trading Center